2016 INFORMS Annual Meeting Program

TD55

INFORMS Nashville – 2016

TD56 Music Row 4- Omni Online Crowdfunding Sponsored: EBusiness Sponsored Session Chair: Zaiyan Wei, Purdue University, West Lafayette, IN, United States, zaiyan@purdue.edu 1 - Users’ Resilience To Kickstarter Scam Xue Tan, University of Washington, xuetan@uw.edu, Yingda Lu, Yong Tan Users’ expected quality of crowdfunding projects is an important determinant of their backing choice. Users who have experienced scam or unsuccessful projects may update their belief in the quality of projects over the platform to a lower level. In this study, we analyze how users learn from their past experience of unsuccessful or scam projects. We use longitudinal backing history of Kickstarter backers, and adopt text mining technique to analyze project failure types. By categorizing the unsuccessful delivery of products into several types, we examine the impacts of different types of project failures. Our work contributes to the policy design of crowdfunding platforms. 2 - Institutional Investors In Online Crowdfunding Zaiyan Wei, Purdue University, West Lafayette, IN, 47907, United States, zaiyan@purdue.edu, Mingfeng Lin, Richard Sias The “crowd” in online crowdfunding is no longer only comprised of retail investors; in fact, debt-based crowdfunding has long attracted the interest of institutional investors. We study whether they are indeed better able to screen borrowers than, and have any impacts on the behaviors of, retail investors. We find that although institutional investors indeed behave differently, overall their portfolios do not outperform those of retail investors. Their bids have significant impacts on the behavior of retail investors, as well as funding outcomes. We find that this effect is driven by the designation of “institutional investors” rather than just the portfolio size. 3 - Effects Of Charitable Giving In Crowdfunding: Crowds Fund Our Kids Qiang Gao, University of Arizona, Tucson, AZ, 85721, United States, qiangg@email.arizona.edu, Paulo B Goes, Mingfeng Lin We investigate how crowdfunding contributes to public goods by exploring the geographical expansion of a donation-based crowdfunding funding platform for educational purpose. Our initial results show that the emergence of crowdfunding as a viable financial source actually affects classroom activities and that crowd donation contributes to the improvement of education. We also find that the impact vary among different projects. Our findings help promote the awareness of such opportunities not documented in literature and benefit society as a whole. 4 - Information Disclosure And Crowdfunding Keongtae Kim, City University of Hong Kong, keongkim@cityu.edu.hk, Jooyoung Park Several strategies in crowdfunding have been introduced to dampen information asymmetry between funders and creators. This study examines one such possible mechanism, namely a platform-wide rule to require the disclosure of project risk, implemented in a crowdfunding platform during our study period. We find that the new disclosure policy led to a decrease in the creation of new projects, even successful ones. Our additional analyses show a stronger effect on creators bearing a larger burden from the disclosure requirement. We further find that the decrease is partly driven by the negative perceptions of funders about the risk information disclosed. TD57 Music Row 5- Omni Emerging Behavioral Work by Doctoral students Sponsored: Behavioral Operations Management Sponsored Session Chair: Julie Niederhoff, Syracuse University, 721 University Ave, WSOM 500, Syracuse, NY, 13244, United States, jniederh@syr.edu 1 - Risk And Loss Aversion In Information Security Investment: Theory And Experiments Jie Zhang, The University of Texas at Arlington, 701 S Nedderman Dr, Arlington, TX, 76019, United States, jie.zhang2@mavs.uta.edu, Kay-Yut Chen, Jingguo Wang Information security has gained much attention in the information systems literature. In this paper, we study how organization should decide the proper levels of investment to reduce the chances of loss, under different risk and loss

2 - Fair Competition Of Brand Name Drugs Under Rebate Arrangements Hui Zhang, Faculty of Business Administration, Lakehead University, hzhang2@lakeheadu.ca When new drugs are listed for a third-party payer’s coverage, they are often required to sign rebate arrangements to reduce payers’ financial risk. In this paper, we consider two forms of rebate arrangements. 1, the new drug is paid at its original price if its sale is under a volume threshold and then is paid at the old drug’s price otherwise. 2, a volume threshold is specified for all drugs. If the total sales of all drugs exceed the threshold, each drug is required to pay a rebate according to its market share. We investigate the optimal decisions of the payer and the drug manufacturers and identify the impact of the rebate on the fairness of competition. TD55 Music Row 3- Omni Inventory Management VI Contributed Session 1 - Dynamic Pricing, Hedging, And Inventory Management In A Two- product Monopoly Under Cost And Demand Risk Max F Schoene, Doctoral Student, WHU - Otto Beisheim School of Management, Reinhold-Friedrichs-Str. 49, Muenster, 48151, Germany, max.schoene@whu.edu, Stefan Spinler, John R Birge We study the joint inventory management, dynamic pricing, and financial hedging problem of a risk-averse, two-product monopolist facing cost and demand risk. These risks can be correlated across markets and customers may view the two products as substitutes or complements creating demand interdependencies. We provide an analytic solution to the firm’s multi-period decision problem and characterize the implications of operating in several interdependent markets for integrated policy making. 2 - A Newsvendor Analysis Of Binomial Yield Production Process Sungyong Choi, Assistant Professor of Supply Chain Management, Yonsei University, 1 Yoneseidae-gil, College of Government and Business, Wonju, 26493, Korea, Republic of, sungyongchoi@gmail.com, Sumin Jeon, Jinmin Kim, Kwangtae Park We study a Binomial yield production process with a newsvendor approach. We provide a reformulation of the original model to convert the discrete exact model to the continuous approximate model by Normal approximation. We conduct comparative static analysis for model parameters in the approximate model and derive monotone properties to the optimal solution. All the analytical results are consistent with our insights and supported by economic explanations. Our numerical examples by sample-based optimization show that the approximate model is sufficiently close to the exact model. Finally, all the results of sensitivity analysis in model parameters are also confirmed numerically. 3 - Onshore And Offshore Procurement: Global Sourcing Strategies Zhe Liu, PhD Candidate, Columbia University, 511 W 112th Street, Apt 24C, New York, NY, 10025, United States, zliu18@gsb.columbia.edu, Awi Federgruen, Lijian Lu This paper studies a finite horizon, single product, periodic review inventory system with two supply sources, which originates from real world global sourcing firms facing onshore and offshore procurement problems. Supply sources are differentiated by their fixed and variable ordering costs, delivery lead times, as well as constraints on the order sizes. Excess inventories may be salvaged at the end of each period with a fixed cost and variable revenue, or be carried over to the next period. We derive structural results for the optimal solution, based on which we are able to characterize the optimal sourcing and salvaging decisions. 4 - Evaluating The Potential Of Additive Manufacturing For Spare Parts Supply Rob Basten, Assistant professor, Eindhoven University of Technology, PO Box 513, IE&IS - OPAC, Eindhoven, 5600MB, Netherlands, r.j.i.basten@tue.nl, Bram Westerweel, Geert-Jan Van Houtum We investigate the decision of whether or not to replace a regularly produced spare part with an alternative produced via additive manufacturing (AM), also called 3D printing. Such a transition requires a one-time investment and changes characteristics such as procurement lead time, production costs and component reliability. We consider the entire product lifecycle and take into account performance benefits and design, inventory, maintenance and downtime costs. We derive analytical properties of the required reliability and production costs of the AM part such that its lifecycle costs break even with that of its regular counterpart.

352